When will new service tax rate 14% be applicable

After budget 2015 , the common question asked to me by various blog readers, when will new service tax rate 14% be applicable? That’s why I have written this post.The new rate will be applicable from 1st June, 2015.

Applicability of new service tax rate 14% after budget 2015:

I can understand worry of service tax payers about new service tax rate. Let me clear that new service tax rate will not be applicable from 1st April, 2015.

When we read the amendment of section 66B, it reads as under,

[su_quote]106. In section 66B of the 1994 Act, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, for the words “twelve per cent.”, the words “fourteen percent.” shall be substituted. [/su_quote]

[su_quote]3.3 The new Service Tax rate shall come into effect from a date to be notified by the Central Government after the enactment of the Finance Bill, 2015. 3.4 Till the time the revised rate comes into effect, the ‘Education Cess’ and ‘Secondary and Higher Education Cess’ will continue to be levied in Service Tax. [/su_quote]

So the new service tax rate 14% shall be applicable from the date notified by Central Government, by way of notification in official gadget, after enactment of finance bill, 2015.

It is not notified yet.

12.36% shall be continue:

Until new service tax rate 14% shall not be notified, service tax rate 12.36% shall be continue as service tax rate.

Institute of Chartered Accountants of India has also issued clarification regarding it. Read it here

Swachh Bharat cess on service tax:

Central government can levy Swachh Bharat Cess on any or all services. The date shall be notified by central government regarding to it. Until that, no need to worry about it and confuse yourself.

How to calculate abatement / exemptions?

Calculate taking 12.36% as base rate. Consider changes applicable from 1/4/15 in abatements. There are few changes in abatement rate. The changes are in abatement rate for manpower service and security service and transportation business. Abatement rate for other services are the same as before budget 2015. So the service tax rate for other services are same as before budget.Once the new service tax rate 14% is notified, new article regarding new rate ( with and without abatement ) shall be published by us.

UPDATE- 19/5/15- SERVICE TAX RATE APPLICABILITY:

New rate applicability of service tax 14%: WILL BE APPLICABLE FROM June 1, 2015. The honorable president gave assent to bill 2015 on 14,2015. But the date is notified on 19/5/2015 via notification 14-2015-ST.New rate of service tax will become applicable and education cess shall be abolished. Charge service tax at 12.26% till May 31, 2015.

The swachh Bharat cess shall be levied on all or any services. The effective date of charging swachh Bharat cess will be notified later. We will update article when there is new notification.

If you are availing benefits of abatement, continue it with changes made in abatement rate in financial bill, 2015. You can read about service tax rate and changes in service tax in budget through following links.

About The Author

Tarannum Khatri is Chartered Accountant of India and Founder of Taxmasala.in. She is currently practicing in taxation field. Besides practice, she loves music and reading great minds..You connect with her on FB by clicking button on right side.

67 Comments

Harshal Choudhary
on April 3, 2015 at 8:27 am

Good subject to Read and know about Service Tax Rate. Can the Notification to be issued by the Government be of retrospective effect. if so, how to get the differential service tax if we bill it at12.36%.

admin
on April 3, 2015 at 10:27 am

No, new service tax rate will not be effective retrospectively. The Central Government will issue the date to charge and pay service tax at 14%. From that date, you are required to charge service tax at 14%.

I want to know the abatement rate in service tax — provide service in diesel filling in tower sector for running tower when there is no electricity

admin
on May 11, 2015 at 2:16 pm

Please clarify your service category. Are you selling diesel or providing any other additional service?

Srinivas
on May 15, 2015 at 9:43 am

I want to file nil income taax return for FY 12-13, 11-13.Is there any chance tile for those years

admin
on May 18, 2015 at 6:25 am

You cannot file because the last date for filling tax return for 2012-13 is 31st March, 2015.

admin
on May 21, 2015 at 12:10 pm

No, you can’t file.

K.DEVARAJAN
on May 14, 2015 at 11:38 am

In the post-budget session completion there is no service tax changes effect till 13.05.2015 by the union govt. how to charge the S.Tax(rate of Tax) as a service Provider in respect of Manpower & goods transport by road etc in the reverse machanisam.

Thanks for the above wonderful post, Have a query on RCM applicable rate.
Can you pls clarify the applicable rate for the below situation –
manpower Service provided in the month of April, Invoice raised in the month of May, ST Remittance is being done in June
What rate is applicable – 12.36% or 14% ?

We received TCS 1% on scrap for the month of April 15 Rs. 290, June 15 Rs. 57 and on oct 15 Rs. 47.
But till now we didn’t paid the tax and not file the return also.
Kindly let me know the interest and penalty rate for the above TCS, if i file on feb 2016